Ep. 306 – Saving To Buy Your Home: Homebuying 101 – Step 5 

Think you need 20% down to buy a home? Think again! This episode shatters common misconceptions about saving for a home and reveals how many buyers are getting into homes with far less saved than they thought they needed.

“Don’t assume on your own how much you need to save. Period. The end curtain… No matter who you are and what your personal financial situation is, you’ve got more options than you think when it comes to buying a home.” – David Sidoni

Key Questions Answered

• What if everything you’ve heard about how much you need to save for a home is wrong?
• Could starting your savings journey before you’re “ready” actually accelerate your path to homeownership?
• What if your current rent payment is the key to building your down payment strategy?
• Is waiting to save “enough” actually costing you more in the long run?
• What if your savings plan could include both homeownership AND life experiences?

Referenced Episodes

• Episodes 19-25: Seven-part series on financial preparation
• Episode 53: Madison’s story (24-year-old first-time buyer)
• Episode 113: Stephanie’s journey with 401(k) strategy
• Episode 161: Sally’s path to homeownership
• Episode 169: Joelle’s perspective on stability
• Episode 181: Corey’s savings approach
• Episode 189: VA loan success story
• Episode 239: Isaiah’s $6,000 savings hack
• Episodes 91, 162, 74, 219: Salary requirements deep dives

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Listen to the podcast here

Saving To Buy Your Home: Homebuying 101 – Step 5

The Key To Saving Money For A First Home

This is step five in the journey that every first-time home buyer needs to know to get started to buy a home. Saving money is step five. It seems like saving money for a down payment would be pretty simple and doesn’t need a lot of explaining, but there are several nuances and important tips that will exponentially increase your results, bringing you closer to your ultimate goal, owning a home. Let’s do this.

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What is up, my how-to-buy homies? I just did finger guns, and I’m regretting it already. I’m David Sidoni, and this is the ultimate ten-part first step for a first-time home buyer. Our step five, saving money for your future purchase. You might be discovering within the first four steps, there are a whole bunch of misconceptions and negative myths surrounding the entire first-time home buying process. They are unnecessarily holding back so many people, and that sucks.

I’m here to spill the tea and get you the real info. Right off the bat, saving money for your first home purchase? Do not assume on your own how much you need to save. Period. The end. Curtain. The reason I say that is because you’re all individuals, and you might have something different in what we call the big O. That didn’t sound right. O is for options. That’s the big O.

No matter who you are and what your personal financial situation is, you’ve got more options than you think when it comes to buying a home. That means options in how much money you need to save. We’re going to talk about how you start saving, tools that can help you save, how much salary you need to make, and how much you need for a down payment and closing costs. Time for the tips.

The best way that I’ve seen people grow their savings when they’re trying to buy a home, especially if they suck at savings and they haven’t been good savers in the past? Automate it. This tip is simple. How much? In several past episodes, I’ve discussed the 70-10-10-10 rule. That comes from the book The Richest Man in Babylon. Super simple book, quick read, highly recommend you grab it or download it. What that means is 70% to your life expenses, 10% to your savings, 10% to investing, and 10% to charity or giving back.

There’s another one that is more for Millennials and Gen Z-ers. NerdWallet breaks it down like this, fifty percent of your paychecks should go to your life’s needs, thirty percent should go to your wants, those extras in life, and twenty percent goes to investing and debt repayment. We did a whole hour on debt in the last episode, so I see why they did that. It’s up to you.

Do your own research and pick a budget that fits your personal lifestyle. This is the tip, automate, automate, automate. It’s the simplest way to do it. It’s something that you can get started with, and the great thing is it starts to make a habit for you. Even better? If you can’t get into the habit because it’s too difficult for you, cool, automate it. You don’t have to think about it. Here’s our pal Corey from episode 181. Here’s what he did.

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Automate Your Savings And Build A Habit

I think one of the biggest things for me was having that student loan and car payment. That’s $600 out of my pocket every single month, but I got used to not having that money, so when I didn’t have it anymore, I saved it instead of spending it. I’m a big fan of the reverse budget where you take what you know are your expenses every month, and instead of saying, “Here’s what I need to save,” I say, “Here’s how much I know that I’ll need for the month, so anything else I can spend.”

I factor in my savings into that. I’m a big fan of paying yourself first because that’s money that’s going to go towards your future. I think one of the biggest things for me is I see money as security more than anything else. The more money that I’m sitting on, the less time I have to spend potentially working in my retirement years, the less I have to worry if something goes wrong. Knowing that I was putting that money away first, that was more valuable to me than anything that I could buy with it.

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Why Paying Yourself First Is Essential

I love Corey. Now you see why I spend so much time in the first steps going over the decision that this is what you want to do and believing in the math to help you get there. It is because if you believe in the math, it’s going to be a lot easier for you moving forward because you’re going to see the positive effects on the wealth accumulation by creating this rent replacement strategy. When that becomes crystal clear in your head, then paying yourself first has a goal, it has a mission. I get it. Post-pandemic, saving money, it’s been hard.

Unless you’ve got some rich, eccentric uncle with tens of thousands of dollars that he’s going to give you to buy a house, then most of us need to start saving because it’s been tough the past few years. I’m not saying deprive yourself. I’m helping you see the big picture first, looking at the big math. The goal here is always to help you get on the solution side of things, even if they’re small steps. It’s not difficult if you automate it. It’s one simple tool for saving, but I’ve got a bunch more.

In fact, when I first started the podcast back in 2019, I did a seven-part series on how to financially prepare to buy your home. It starts at episode 19. Don’t go and listen to all seven of those episodes before you start. Start now. Immediately. You’re here, you want to do this. Who puts me in their ear holes for fun? You must have some motivation to get things started. I’m letting you know, if you’re here to learn, the biggest lesson I can give you is don’t listen so much, listen and take action every single time. I say that out of love. Don’t just listen, create some action now.

Giving you these baby steps is letting you realize that buying a home is not as complicated and overwhelming as it feels, like everything you read on the internet. This step right here, saving, it’s a pretty simple one, nothing to fear. Your step five can be as simple as opening a down payment savings account and automating $25 a week, $100 a month, $25 or $250, I don’t care, or $1,000 a week or a month. That’s going to depend on you. The key is to start it now. Automate it.

There’s zero downside, no matter what you plan on doing in the future, to putting some money aside. As always, a legit, experienced, and understanding real estate support team, a realtor and a lender, can help you maximize your efficiency in how much to save and get you working on your financial preparedness. At the same time, they’re going to assure that you avoid classic first-time home buyer mistakes. There can be mistakes in savings. More on that later.

Go to the seven-part series starting at episode 19 to get all kinds of tools. They’re very beginner tools there, all the way into some fiscally advanced stuff. I’ve had a lot of listeners tell me that they are in the process of buying a home, and they go back and re-listen to that series while they’re progressing in their own journey. It is because, depending on where they are, they learn something or they hear something that helps them for exactly where they are within their personal path. Let’s jump to the remaining topics. How much salary do you need to make? How much for a down payment?

These are all covered with one answer, I don’t know. I know it’s not what you’re looking to hear, but here’s the deal. Any BS artists out there who try to tell you that they can give you the answer to that question without having at least a 45-minute conversation, we’re talking caring and empathetic listening to you, about you, your family’s goals, your hopes, your dreams, your debts, your assets, your salary, your potential promotions, your future family plans, the desire for your home, for you, your pets, your potential overtime you could be doing, and a hundred other things, if they’re not figuring all of that out and they’re giving you an answer, they’re a tool, and they’re straight-up lying to you to make money off you.

By now, many of you who’ve got into these ten steps for the quick and easy answers hate to hear me say that, but I understand where you’re coming from. I do say that with love because I’ve seen this hundreds of times. I know people who don’t care and they’re trying to sell you something, and they’ll give you that quick and easy answer because it’s for their best interest, not yours. Sucks, but there aren’t one-size-fits-all answers to the questions.

Demanding the Right Advocates for Your Home Purchase

How much salary do I need to make and how much do I need for a down payment? The simple answer is it totally depends. Don’t cringe at that. Take this education we get now and feel confident that you’re getting the right education. I’m telling you, it depends on you, and you should demand that the people you’re talking to, people who could potentially be your representatives, your advocates, you should demand that they want to know what you want, and you want to know all your options. They know that there are several different paths to get you the keys to your house, and they shouldn’t just put you into one answer.

You deserve premium service, so don’t look for Johnny or Jenny quick results. I know that some of you have thrown your ear pods against the wall in anger because I said, “It depends.” I can’t give you an answer because maybe you’ve already been so confounded in your research, you were hoping that this one random dude would give you the clear, simple, concise answer that you crave. That’s not what I’m about. I’m here to show you the best path for you, not the path to make you feel warm and fuzzy and then make a sale off of you. You’ve been getting hosed for too many years, and you should demand more from people.

To appease your sense of accomplishment and progress, I want to make sure that you do feel like you’re moving forward. I’m going to give you one overall, very basic equation for the question, how much should you save? I don’t know if you remember the order of things, but notice I skipped right past “How much salary do you make?” That’s crazy. Especially since I’ve done full episodes on the topic, episode 9, 162, 74, and 219. I’ve looked at the data, they get more clicks than a lot of my other episodes.

The answer to how much salary you need to make is there, and it’s far too complex to explain in the middle of this episode. Why is that? That’s because it depends on your individual finances. A lot of it has to do with your debt-to-income ratio, your DTI, but let’s not forget how much salary you need to make and how much you need to save. It’s going to depend heavily on the mortgage interest rates, and those change multiple times in one day. If you asked the question a month ago, it’s nowhere near what the answer is at the time you’re getting ready to get a full loan approval.

Nobody can print an article, record a podcast, create a YouTube video, or give you a single PDF spreadsheet that definitively says, “If you make $100,000, you can afford this much home.” When you see that, ignore all of that. It’s clickbait nonsense for someone looking to sell you, not educate you. The answer changes daily, and that’s used correctly. It changes daily. It is not an exact science. That’s why we are trying to get you a generic answer first, for how much should you save? The basic equation is, you want to shoot to save for 8% of the purchase price of the home that you want to buy.

You’re not going to hear that number from everyone else, and I understand that. You don’t have to save 8%. For a lot of you, you might be a lot less. This is a conservative number to help you get off your butt and find a support team to start planning. I do know that some of you could be as low as 5%, 3%, or even 1% total for the down payment and closing costs, 1% of the purchase price. That might be all you need to close on a home. Some of you could do a zero-down payment, pay the closing costs, or maybe you could total out zero. You could use zero down payment and then get the seller to pay your closing costs, use a grant, or a down payment assistance program.

Are you thinking, “Is there a cheat code I can learn how to do that, David? Show me the app that I can just punch a couple of buttons and that’ll work for me.” No, each of you is different, and there isn’t a simple app or a simple form to get you to do this. You can’t Google it. Now talk to your pros and find out what options are for you. That’s why, to give you something to shoot for, 8% of the purchase price of the homes that you’re looking to buy is a good conservative number to shoot for. It’s a 5% down payment, that’s 5% of the purchase price of the home, and then add approximately another 3% of that price to cover your closing costs.

Once again, there are thousands of factors that come into play to see if you qualify for that particular equation or to see if you qualify for even something much lower, and that will tell you specifically how much you need to save. That’s precisely why I put step two way ahead of step five. Start with step two, getting your guides, and then you can get a professional evaluation of what your specific numbers need to be. The rest of everything that you need to do, that’s going to depend on where you are on the chutes and the ladder board. We talked about that in episode 154, I mentioned it a few times.

I’ve got another example on how to work your savings. Madison is my main gal. She’s from episode 53. She’s here in Southern California, and I worked with her myself while I was doing the podcast. She was 24 years old when she bought her first condo. She is a perfect example, and before I got ready to talk to her about her on the podcast, I texted her to get a reminder on some of the details, and she gave me some great examples on how to work steps 4 and 5. If you want to hear the whole thing, it’s episode 53, OG episode way back in the podcast library. She texted me this, and this is what she did.

She wanted to put a whole bunch more down, but after talking to her team, she said she put down 5%. Once she went from putting 20% down and using all of her investing, she decided to put 5% down. She said she was originally looking at a 3.5% FHA loan, but after talking with my local unicorn lender, Dino, they discussed that since she had the 5% put down, she could do what was called a conventional loan. That would be able to help her get rid of PMI, which was small, only $98 a month, a lot earlier.

After total closing costs equaled $17,000, she still had $4,000 left in her liquid savings account. This was for a $475,000 condo, and she was conservative. She still had $2,000 in a Roth IRA, $150,000 in investments in mutual funds that she didn’t want to touch, and she didn’t have to, $10,000 in a CD that expired the year after she bought, and the $4,000 that she had left over was cash, which was both for her home fund and her emergency fund. At the end of the text, she was like, “That reminds me, I need to talk to Dino because I need to find out how to get rid of my PMI without having to refinance.”

If you’re brand new, a lot of that probably didn’t make any sense to you, and that’s fine, that’s cool. That’s for the advanced listener. I hope what you did hear was how she had a big chunk of savings, but she decided to leverage her funds with a lower down payment to make the purchase. Why would she do that? That was a few years ago, and her $475,000 condo is now worth $650,000. We’re starting her plan for her next home purchase, but she had to look at all her options with the team and figure out what was best to do. That’s where she decided to leverage, and now she’s got a ton of equity and she’s rocking and rolling for the next steps in her life.

It’s a great episode. Dig back in the archives. Madison is the queen, check her out. The interview episodes are great. They give you lots of real-life chicken nuggets of wisdom to share. Grab your honey mustard and start dipping those nuggets. By the way, if you dip them in ketchup, you are a peasant. Next up, we got some more real-life stories that are going to help your personal savings plan. This one comes from episode 194. Let’s hear Jacob. What up, Jacob? Talk to us about savings and buying a home.

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My wife and I looked, and we had been saving around $1,000 a month without major changes to our spending budget because we don’t have children, so that’s a big plus as far as saving money goes. We do want children, but we also don’t want children in the 800-square-foot apartment that we were living in. We wanted to move and upgrade to somewhere where we could grow into it.

Back in December of 2022, you sent me this note. You said, “I don’t think I have access to all the tools I need to be successful with a first-time home buying purchase. Would you be willing to help us obtain the right information to be successful?” Give us the scoop. Did we do that for you?

A hundred percent. It was not only quick, it was easy. All the tools were in front of me in what felt like 24 hours. It was unbelievable.

Everybody, I didn’t pay him to say that. We talked for about eight seconds before I started recording. That’s awesome. Jacob came to us in December of 2022. He closed on a home, get ready to celebrate, everybody, on April 20. You heard that right, April of 2023. It took him four months. When Jacob came to us, he was currently renting at $1,500 a month, had about $1,000 a month in debt that you were paying at that time, or payments, or like monthly bills, I should say.

Something of the sort, yeah.

Is this right? You closed in April. In December, you then had $2,100 saved?

Yes. In August, I talked with my wife, and I said, “What are we doing?” We were living paycheck to paycheck for no reason. We weren’t saving any money at all. We couldn’t go somewhere our friends invited us to because we could not afford it. From September to December, we were able to save $2,100.

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How Much Do You Really Need To Save?

We went from Madison, who had hundreds of thousands of dollars in the bank, to Jacob, who had $2,100 saved in December and was living paycheck to paycheck. He didn’t have any family that was going to help him out. He didn’t have a 401(k) to pull from, and he wasn’t getting a big Christmas bonus, but they managed to build a savings plan with the guidance of experienced pros. That was December. With only $2,100, they closed on a home in April. Lesson there is, you don’t know what you don’t know.

When you’re teamed with unicorns, boom, four months, and you got the keys to a home. That’s not going to be the way it is for everybody, but here’s another example for you. This is Stephanie from episode 189. Stephanie was under the impression that she needed to save 30% down to buy a home, but she ended up with a way better number than that.

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Two years ago, we did have some debt. We had student loan debt, we had some credit cards, we had auto loans. I don’t know if we want to call it regular, but a lot of people have this experience where they have those types of debts.

It’s regular. In America and Canada, it’s regular. Don’t worry about it, no need to quantify.

We had debt. We also had a low credit score, the uneducated portion of what that meant for us. They don’t teach it in school. We keep up with it. When we went to look at it, we were like, “Whoops, we let that go and are not prepared.” Another thing that we experienced two years ago is that the market was very different. People were putting in cash offers way over market price.

We were trying to use my VA loan. I spent eight years in the army, and we were very excited to be able to leverage that in our experience. We connected with a realtor, we reached out to him, and we were like, “I think we’re ready to buy a house, or we want to start a plan. Can I talk to you?” He got on the phone with us and said, “You don’t make enough money. You need to put at least 30% down. Also, nobody’s taking a VA home loan. Don’t even think about using that.”

We were very discouraged with all of those things. We thought we had so much work to do to try and save up 30%. We didn’t have 30% in the bank. We didn’t have the income for it. My husband, as well, is an entrepreneur, and we had to prove his income in a way that we weren’t prepared to do two years ago. That was a big awakening for us.

I have lots of questions about that. The first thing that probably the listeners want to know is, two years ago, you thought it was 30%. What did you end up putting down for this purchase?

We put nothing down.

Say that again.

We put nothing down.

Two years ago, somebody told you you had to have 30%, and now you did it for nothing. I want to reiterate to everybody. When did you guys close?

We closed in December.

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Why You Need A Trusted Home Buying Team

I am so glad that she ended up reaching out because they got straight-up lied to when some realtor who didn’t know their butt from a hole in the ground told them that they could not use a VA loan and that they needed to have 30% down to buy a home. I don’t even know where they got the number. This is another example of, instead of asking Google, “How much do you need to save to buy a $400,000 home?” the best way, and I’m imploring you to do this, instead of researching that number and that question online, you should be spending way more time researching the professionals so you can hire them and ask them what all your options are.

Jump back to step two, get your guides, and then you can ask them. You’re going to have way more options than you find online, and you’ll get your own custom, personal, clear answers. It is because, remember, I know you hate to hear it, but I don’t know, it depends. This next tip came from a very sharp woman that I had the pleasure of meeting and doing this interview. This lady is super smart. I talk all the time with different buyers about the fear of being house poor.

It’s a feeling that I know is holding a lot of you guys back, and I empathize. I understand that concern. It’s not one that I dismiss. I happen to have all the math behind it. To fight that emotion, I don’t use platitudes or I don’t respond with passion. I don’t say, “Everyone else did it, you should.” I go practical, and I make sure that you can see the math. Listen to how Joelle, from episode 169, and her mother ended up viewing the savings and house poor issue.

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The stability and knowing that the rent would be the same. My landlord had been talking about selling the place, which would change all of this math. That wouldn’t be in my control because so many of them wanted to offload it. You end up being in a spot where you’re like watching your landlord’s life. Are they getting a divorce? Will it sell? What’s happening? I need to get out of that and have more control over what’s going on. Also, a big part too is coming to terms, this is the emotional part again, with the fact that I needed that. I was using that gap between what was coming in and what was going out for rent to save, to save, to save, to save.

Most of that went to savings. I was having a conversation with my parents, and my mom was like, “You don’t have to worry about not having the same level of buffer anymore because this is the thing you were saving for. You were putting away for this. If you have this, you may not need to save to the same level as quickly. You can take your time with certain things or make adjustments.” That was like, this is the thing. You don’t save to save, you save for a reason. This was my reason. I just was hesitant to get out of that mindset.

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That was awesome, Joelle 169. What Joelle talked about was that she had the feeling, I get that, because as an adult, this feeling sucks. When you’re sitting there as a tenant, you have no control over something big, like where you live. When she finally moved on from that bad advice she got from the first people that she talked to, she did some deeper research here on the podcast and found out that saving 30% down wasn’t what she needed to do. She could do this with a zero-down payment. That means she gets control of her life a lot sooner.

You got to love Mom for bringing the math when she was freaking out about being able to save money once she bought the home because now she’s going to have a new higher mortgage payment. Her mom said, “Sweetie, this is what you’re saving for.” Mom also knows that when you buy a home, you might not be able to save as much, but that payment you put into a home, your home, is a forced savings account. A zero-down payment, not 30%, you jackass, that was her answer. Her number to save was just enough to cover her closing costs. I know that some of you came here to look for your exact savings number.

Perhaps, I don’t know, maybe you’re an extremely analytical type. You like to look at all your decisions on a spreadsheet. In the real estate business, people who come to us with that budgeting and style and decision-making process, we call them an engineer. What’s cool is this next interview is with an actual engineer. I thought that he was going to have a heart attack when I explained how the planning was going to go. The real estate professionals know that everything that you do when you’re setting up your plan is personal and custom.

We know that the answer for most of the things that you’re looking for is going to be, it depends. You have several options. We anticipate that engineers types, that they’re going to have trouble digesting this. We also know that your brain is going to explode when we tell you that in calculating these numbers and options, nothing is exact. Everything is estimated. That’s a four-letter word to engineers.

Your best planning is to examine all the options and then create a savings estimate. Another dirty word to engineers. You have to be flexible because it’s going to adjust. It will change many times. That’s because the rates for your interest on your loan, the prices of homes, and the housing market are continually fluid estimates and flexible. Soak them in, engineers, and get ready for that. Let’s see what engineer Jake had to say.

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On the financial side, was this something I know you said you got out of school, and you were thinking about this? Have you been prepping this for a while, or were you surprised at what you could afford? Some people think they’ve got to put 20% down. Where was your headspace coming in?

Don’t lose sleep over trying to find the perfect down payment amount. Put down 5%, and you’ve got a good deal.

With that one too, that was one of the, maybe not pitfalls, but so I put 5% down, and I was like worried about, do I need to try to put more down to get less interest over the life of the loan? This, that, and another. The lender helped a lot because he was like, “Don’t stress between 5% to 7% to 8%, or unless you go up to like the next 10%, then don’t worry about it. Let’s stay with the 5% and move on,” kind of deal, which was good to hear. It is because I was losing sleep over it or trying to find the perfect number to put down. He was like, “Put the 5% and you got a good deal. Let’s move on.”

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I know maybe some of you were thinking, “That’s awesome.” The guy had an option to 8%, 9%, or 10%, or 5%. That’s not me. I hear you. Maybe you’re out there and you only have 1% saved. If you feel like it’s going to take you years to save up for what you need to have a down payment, a close cost on our house, I get it. There are options for you. I want to make sure that we get one of these myths busted correctly. Maybe you’ve heard people say, “You can use your 401(k).”

You can use that for one time, no penalty, non-taxable event if you use those funds for the purchase of your primary residence. I know a lot of people hear that, and they retreat big time. In fact, I’ve even heard people say, “That scumbag realtor or lender, they heard I said I didn’t have enough money saved. Rather than help me work a plan for 6 to 8 months, they wanted to screw my future by making me pull from my retirement so that they could get a sale.”

When I hear that, I don’t get upset. I’m with you. I know why you think that. It truly bums me out how many non-professionals call themselves professionals and are working in real estate and lending, giving incomplete advice. It’s the way it is. The sooner that we all recognize there are lots of realtors and lenders out there that are either scumbags or they’re massively undertrained and trying out this profession, the sooner you’re going to be able to find your guides, get trusted pros, and work together, developing trust with them so that they can help you find the creative solutions.

It is because it’s tough in the 2025 market, and the good ones out there are going to give you your options, and they all lead with math. When it comes to 401(k), listen to what conclusion Stephanie came to. If you listen to her entire episode, episode 113, you’ll find out that we’re not talking to a kid here. She’s more Gen X than Millennial or Gen Z. This lady’s smart, on the ball. Let’s see what Stephanie had to say.

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One revelation was that I was listening to one of your episodes, and I knew because I’m a single person that I would probably need to borrow from my 401(k) to make a down payment, which a lot of people tell you not to do. I knew that I would have to do that, and it gave me some hesitation. It gave me a little anxiety and, again, milestone age.

I understand. I got your beat, I’m sure.

I don’t know about that. One of the things you said is you have to think of it as diversifying your investments. That made a lot of sense to me because I could keep stocking money away into my 401(k) and look at the number and be all proud, but I would still be renting, and that rent would still go up. It made a lot of sense to me, especially how I could also recalibrate my contributions so that I’m not putting my entire paycheck into my mortgage. All of that was like, I didn’t even think of it that way. It made me feel a lot better about the direction I was going in.

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The 401(k) thing, this is one of those options that I told you about. Unfortunately, you just can’t get by punching some numbers into a form. Stephanie learned that using her 401(k) for a down payment shouldn’t be seen as taking away from or withdrawing from her retirement. Rather, it’s a simple diversification of her overall retirement strategy. If you want details on that, that’s in episodes 22, 58, 75, and her episode 113.

Another topic that comes up with saving money to buy a home is, how about trying to time the purchase of the home with the end of your lease? It is because, after all, you’re saving money, you’re busting your butt doing that. The last thing that you would ever contemplate is deciding to break your lease early because that means you have to pay extra money, which takes money out of your savings. That doesn’t make any sense. Listen to this.

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We closed on our house in November. I’m sure we’ll get to that, but we closed on our house at the end of October and moved in November 1st.

That’s before the end of your lease.

Like I said, our deadline was, “We’ve got to be out of here. We got to buy a house before March. Let’s be well prepared.” Fast forward, we’re closing on a house before the end of the year. We had plenty of time, and we wouldn’t change a thing because we had a deadline and met that deadline well in advance.

What are you guys, independently wealthy? How can you afford to break a lease and buy a house? That sounds like the foolish thing I’ve ever heard of. Please explain to me why you would think it’s okay to break a lease. Why didn’t you wait?

Our biggest thing, like I said, we have, not to get into the details of where we’ve lived in the past, but we had not finished a lease, or we have always finished the lease and then moved. It’s happened that way. Coincidentally, it’s not that we were kicked out or weren’t told to renew our lease. It worked out that way.

A lot of times, it’s been cheaper to go start a new lease than to have where we live renewed. It would have been more expensive than to go get a new lease.

We wanted to avoid, “Here’s your new lease that you can start for another year. We’re going to increase it by X amount of dollars.” As we approached it and got educated, we were like, we have enough money to close on a house. We’ll talk about it. I’m sure the avenues that we took to get additional funds to help us close, and also use money to help us move. Break the lease, move, buy furniture, do things to our new home, all that good stuff.

I’ll take my facetiousness out of my voice now. In general, when you’re a renter, you understand first and last, and you understand breaking a lease. When you sign a lease and you’re twelve months out, if you start working with an agent and you have professional people guiding you, the goal is, we need to save a lot of money. If you can do all that in six months, and you’re getting all set, suddenly $2,000 for breaking the lease is one piece of a much bigger puzzle.

Here’s some math for 2025. Let’s say you’re looking at a $400,000 home. Homes this year are expected to appreciate 2% to 4%. Some say more than that, but let’s be conservative. Let’s say 3%. If you’re waiting to save the $2,000 it’s going to cost you because you’re going to break your lease and your lease isn’t up until November, you could instead look at the options now to find a lower cost to purchase your home, meaning using a lower down payment or using some of the many options that are out there.

If you do that and, let’s say, you do six months before your lease ends, 3% on $400,000 is $12,000 for the year, but six months, that means you get $6,000 in appreciation this year versus the $2,000 it was going to cost you to break your lease. Are you saving money? Not to mention the fact that that $400,000 home at the end of 2025, if that’s when your lease is up, those homes are going to cost more, which means all the expenses are going to be way more than the $2,000. Plus, one of the things I’ve found through a lot of the homies out there is landlords love to jack up the rent.

A lot of them have talked to them and said, “I know the contract says this, but if I want to get out of my lease 2, 3, or 6 months early, can we negotiate a better deal?” A lot of times, they’ll do it. If you’re looking for more information on timing your lease with the purchase of your home, that’s episodes 152 and 247. There’s a cool bonus tip that came to me from Isaiah in episode 239, how to save $6,000 at the end of your lease. It’s a great one. I’ve saved some of the good nuggets for the end of this epic saving money episode. This one is about saving for a new build home versus saving for buying a resale home. Let’s turn to my favorite medical doctor and his partner in Vegas, John and Richard.

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The Unexpected Costs Of New Build Homes

The other thing I will say that came into play too for me was the monthly payment, because I manage our finances, and in a new build, the tax payment adds so much more money to the monthly mortgage payment that we realized that even though technically this house was a little more expensive than any of the new builds we saw, because of its prime location, prime neighborhood, it was still a cheaper monthly payment because we didn’t have the gigantic tax part of the mortgage there. That made a huge game-changer for us. I was like, for sure, going with the resale. Even though we had already fallen in love with it, then it was numbers-wise, it also makes sense too. At the end of the day, it was easier to sleep with that as well.

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When I say those words that make some people cringe, “It depends,” now you see why. Everyone’s situation for how much you need to save is totally different. I hope you’re enjoying hearing all the different voices here. Perhaps you hear a bit of yourself in some of them. These are some of the dozens and dozens, dare I say hundreds, of individual paths to savings goals to buy a home. I saved the best of the last two super nuggets of valuable information to help you plan your debt reduction and savings plan at the end of this episode.

This next one, the interview, was probably one of my top three interviews of all the 70-plus that I’ve done. It is a classic. It is so poignant. I named it Achieving the American Dream. I did that totally not ironically, it wasn’t hyperbolic. Sally genuinely is the American dream. If you haven’t listened to it, listen to episode 161. If you have listened to it, now go back and listen to it again, because now you can turn your mind to be tuned right on how she did things with her debt and her savings.

Love Sally. She and her husband, they only had $5,000 saved up, and they bought a $348,000 home with only $23,000 total. I know you’re thinking, “No way you could do that. How do I do that?” I don’t know. It depends. This was what she found out. The funny thing is, in the interview, she tells us that she tried to do this once. She stopped because fear freaked her out, and she didn’t do it. That was in the summer. She got scared, and then she re-signed her lease. At the end of the year, she went, “I’m afraid, but I don’t think I know everything.” What? Did she break her lease? You can hear what happened. This is gold.

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How First-Time Buyers Can Overcome Fear

I took that little break because of the fear that I was still feeling. If it wasn’t for that, I feel like I would have closed during the summer. Honestly, I wouldn’t have to go through all the trouble with renewing my lease and all of that. It was crazy, the interest rates and all of that. I think that was one of the things that was also holding me back. Like I said, we reached out to Tara. She answered all the questions. I connected with Ashley again. She was like, “You can do this. Here’s the scenarios. This is what you need to do.” I was like, “Let’s do it.”

Ashley was saying you can do this?

Pretty much everybody.

Did they listen to the podcast?

You, Tara, Ashley, I was the only one who was thinking like, “I don’t know. I don’t think this is possible,” because you still have that little voice in your head. There’s so much miseducation and miscommunication out there. I grew up thinking buying a house is for rich people. It’s not something that everybody can do. I was so wrong.

That’s amazing. Everybody wants to know what got you over the fears?

I think, like I said, that reassuring and that support from everybody. You with the email follow-ups and text messages, Tara answering all of my questions, Ashley running thousands of scenarios that I was asking her for. It was that reassurance from everybody and not allowing that little voice that I was talking about earlier to take over. That’s pretty much what got me through it.

That’s incredible. What’s so neat to hear about all that is that it sounds like you were presented options that you didn’t know about, because everything out there is so confusing. When you had a team of people answering your specific questions, that was cool. You said Ashley was the lender unicorn through Tara, and you had that full support team. She was running different scenarios with you, because as the market changed, I’m assuming pricing and everything changed. That’s cool.

It was pretty much. My husband and I bought together. He is a self-employed person. I was worried about his situation because we had moved to Florida from Chicago. He was starting from scratch, building his clientele here. It’s like, he’s not making enough money. I do make good money, but it’s only me. Maybe that is not going to be enough. We have a great credit score. We’re good savers, but I do have student loan debt, which is small. It’s not that big. It’s like $30,000.

I was worried about it. I was like, “How does my student loan impact my approval odds and everything? How much money do we need to save?” It is because you have this whole 20% down that you keep hearing about. I was like, “By the time we save that 20% for the house price that we’re looking at, we’re not going to be able to afford it still, because prices keep going up.” It was like all of that misinformation that I had. I didn’t know much about the PMI and all of that.

That’s why I was thinking like, “This is not possible.” Ashley was excellent in running everything and telling me, “If you use your 401(k) savings, if you take a loan, this is how much you need for the down payment. If you buy a house for this price or this price or this price.” She was the one telling me like, “You can afford this price.” I was like, “Really? I have no idea.” All of that whole process was so, I don’t know, I can’t even describe it. It was so amazing to have that reassurance that yes, you can do this, and you’re completely wrong about thinking that you can’t afford it.

You’re not wrong. You didn’t know. It’s like, I don’t know how to fix a carburetor, but if you show me, maybe I can. I was cracking up that you’re like five podcast topics. I’m like, oh my gosh, don’t need 20% down, renewing your lease, student loans.

Those are pretty much all of the podcast episodes that I listened to because I didn’t listen to the whole thing. It is because I feel that you should listen to a few episodes, and you have all the information that you need. I obviously recommend everybody to continue to listen to everything. I went immediately to the episodes that I wanted to know the most about, which were like debt, and the down payment, PMI, and renting versus buying. It is because I was crazy thinking that renting was better than owning. I was one of those people. I listened to those specific episodes, and it was so helpful.

It’s fantastic. Especially now, we’re changing things for 2023 because I’m like, I’m at 160 episodes or something. That’s why I went back and redid one of the early ones, and I said, pick the ones that mattered to you.

I remember listening to that, and I was like, I don’t need to listen to this from episode one. Let me just go into the descriptions. I listened to the ones that I needed or felt that I needed to listen to. It was super helpful.

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That episode was from 2023. If some of you are thinking, that’s when rates were low, nope. Go back and look at the chart. She, in the summer, could have gotten a 3% interest rate. When she came back, rates were at 7.5% but she had more information. The concepts from 2023 and 2024, a lot of those are very workable in our market here in 2025. The lessons there are very valuable, and it will help you find your own personal tools to achieve affordability.

For many of you that still feel like saving for a down payment is going to mean that you’re going to have to miss out on life’s adventures and experiences while you’re in the prime of your life, Rad, I am totally with you. I get that feeling. In fact, that’s precisely why I started this whole thing. It doesn’t have to be one or the other. You don’t have to live an either-or life. It’s a both-and life. When you work a program that shows you all of your options, you don’t have to jump into one. You can pick the one that you discover works best for you.

It’s probably a lot less than you think you need to save. If you jump into that, you’re going to get the benefits of your time as a homeowner because the longer you own, the more your wealth grows. It’s a both-and philosophy. Remember, we’re using money you already spend. It’s a rent replacement strategy. Forget house-poor and unaffordable thinking, thinking that once you buy a home, that’s it. You’re done. All your savings are gone.

You can choose the option that works best for you, and it’s probably a lot less than you think you need to save. By taking that step, you’ll start gaining the benefits of homeownership.

You’re going to be a slave to your mortgage, not going to get to do anything. Your life’s going to be all FOMO, and there’s going to be no YOLO stuff for you anymore. Cool. Listen to what Sally and her husband did. It might change your personal answer to how much do we need to save for our closing costs? Listen to this.

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How To Save Money Without Missing Out On Life

Ever since I started the process, I went into super savings mode. I didn’t want to spend a penny. We’re not traveling. We’re not doing this because we’re buying a house. After we buy a house, we can do whatever. That’s essentially what we did, pretty much. I did save a lot. I was preparing myself for the mortgage payment. I didn’t need to save that much because, like I said, Ashley helped me a lot with the numbers. I knew right there and then that it would be fine. Going into it, the transition wouldn’t be too difficult or anything. I did go into super savings mode because I wanted to be safe.

I’m like, I want this to happen. I don’t want anything to mess it up. I saved a lot. Pretty much the day we closed, we went on a shopping spree for the house, pretty much bought a bunch of things for the house. I traveled to Spain in the last two weeks. It’s like we have our house now. We have a bunch of house projects that we want to do, which is going to be super fun. We’re in that place where we know what our expenses are, and we can now travel and do more fun stuff. Figure out what you want, and then do the math.

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Figure out what you want, and then do that math. It’s math. Once Sally and her husband had the math of their personal plan, which, by the way, was totally different than what she was trying to do on her own in the summer. Once she had the plan right, she figured out the savings, and she added her own non-negotiable extras before she made the purchase so she could feel safe enough to be able to buy furniture and throw in a trip to Spain.

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That’s steps one through five. These are the foundations, which means we spend a little more time on them. I want to let you know the next five steps will go much quicker than the first five. There’s a reason for that. I’ve been doing this since 2006. The one thing I hear more than anyone from all my first-time home buyers is, “Sidoni, if I’d planned earlier, I could have done this last year, two years ago. I had no idea how easy it was to dump my rent once I got all these options.” I told you over the last five years, 72% of the people that have reached out to the podcast who think that they’re 12 to 18 months from buying a home, they get under contract in 3.4 months.

That’s why we got so heavy on the front here. The real estate industry has done you dirty, and it’s not serving up the much more crucial information that you need about buying a home. The stuff that is way more important than how to get the best interest rate, how to inspect a home, or how to negotiate your contract. That stuff is here in these five steps. It will set you up for a much larger financial win. Get your team months, maybe even years earlier than you think. You can plan with thousands of different options.

All the things that you need to work on, the big three, your credit score, your debt, your savings, and then you can get better buying options when all that has been researched and planned with the advocacy and guidance of professionals that you trust. The rest falls into place, including how much you need to save to buy a home in 2025. Get ready for steps 6 through 10. When you’re done, you’re going to have earned your home-buying doctrine, like Dr. Kendall, and you’ll be ready to be a first-time homebuyer.

If you’re picking up what I’m putting down, and this makes sense to you, and you want to get a jumpstart and get your own unicorn team, go to HowToBuyAHome.com. Get your team, work with your pros while you keep listening to the podcast and keep getting educated. A couple of right moves with the guidance of the professional team is going to put you way ahead in the game. You need to know that the unicorns realize that when you reach out to them, you might not be ready to buy, and they’re not going to force you.

In fact, they’re going to ask you to take a step back and work your plan better first so that you can get the best options for maximizing your purchasing power. Before I get ready to wrap things up, I do want to ask you, if you like what you’re hearing here, halfway through your ten steps, please write a quick review on Apple or Spotify. Please, please. The reviews there help other people find us. I’ll tell you what, you can text it to your friends from your phone. Any renters out there? Text it to them.

There’s also more information on YouTube, which is at How To Buy A Home on YouTube, or Instagram, which is @HowToBuyAHomePodcast. I am here for you. If you go and look at the Instagram and the YouTube, there are hours and hours of information. It’s exclusive stuff for first-time homebuyers, education, empowerment, because you’ve been getting shade for way too long from the industry. Before we go, here’s a little encouragement from Dr. Kendall on our way out.

We were so shocked at the immediate peace we felt once we moved into our own home. I know there’s fear, too. There’s fear around things, but there has been such an immense peace and a settledness that feels good.

As Sally said.

I was downstairs one Saturday, and I ran upstairs. I don’t know. I was going to pick up something. While I was running upstairs, I told myself out loud, “I own a house,” and started running. It was like out of the blue. It was that awesome feeling that you realize that this is mine.

Sally, you did it. For the rest of you, you can do this.

Important Links

• The Richest Man in Babylon
• NerdWallet
• How To Buy A Home
• How To Buy A Home on Apple Podcast
• How To Buy A Home on Spotify
• How To Buy A Home on YouTube
• How To Buy A Home on Instagram
• Ep. 181 From Apartment Life to Real Homeowner
• Ep. 162 – How Much Home Can You Afford With Your Salary?
• Ep. 9 – How Much Money Do I Need To Make To Buy My First Home?
• Ep. 19 – How To Financially Prepare To Buy Your First Home – Part I
• Ep 74 – The Bubble Bursting And A Market Crash And What To Do As A First Time Home Buyer
• Ep 219 – How Much Money Do You Need To Make To Buy A Home – For REALS!
• Ep 53 – Real Story From A Real First-Time Homebuyer – Madison’s Story
• Ep. 194 – Interview – Making the Impossible Purchase Possible
• Ep. 189 – INTERVIEW – VA Loans: Bad for Buyers or a Christmas Miracle?
• Ep. 169 – Interview: A single woman takes control and buys her first home on her own
• Ep 113 – Interview With A Single, Female First-Time Home Buyer In 2022
• Ep. 22 – How To Financially Prepare To Buy Your First Home – Part IV
• Ep 58 – How to Use Your Retirement Savings to Buy Your First Home the SAFE Way, and Deep Random Thoughts
• Ep 75 – Inspection Red Flags, New Tips For 2022 Bidding Wars, And…To Wait, Or Not to Wait?
• Ep. 152 – Interview With A Baltimore Area First Time Home Buyer Couple – How They Did It
• Ep. 161 – Achieving The American Dream: An Interview With Sally

This podcast was started for YOU, to demystify things for first time home buyers, and help crush the confusion. After helping first timers for over 13 years, I knew there wasn’t t a lot of clear, tangible, useable information out there on the internet, so I started this podcast. Help me spread the word to other people just like you, dying for answers. Tell your friends, family, and perhaps that random neighbor you REALLY want to move out about How to Buy a Home! A really easy way is to hit the share button and text it to your friends. Go for it, help someone out. And if you’re not already a regular listener, subscribe and get constant updates on the market. If you are a regular and learned something, help me help others – give the show a quick review in Apple Podcasts or wherever you get your podcasts, or write a review on Spotify. Let’s change the way the real estate industry treats you first time buyers, one buyer at a time, starting with you – and make sure your favorite people don’t get screwed by going into this HUGE step blind and confused. Viva la Unicorn Revolution!

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